SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 2003 Commission
File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
a Michigan Limited Partnership
(Exact name of registrant as specified in its charter)
| MICHIGAN | | 38-2702802
|
| (State or other jurisdiction of | | (I.R.S. employer
|
| incorporation or organization) | | identification number)
|
280 Daines Street, Birmingham, Michigan 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
units of limited partnership interest
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
| | | | Page
|
| ITEM 1. | FINANCIAL STATEMENTS |
|
| Balance Sheets
|
| September 30, 2003(Unaudited) and
|
| December 31, 2002 | 3
|
|
| Statements of Income
|
| Nine months ended September 30, 2003 and 2002(Unaudited)
|
| Three months ended September 30, 2003
|
| and 2002(Unaudited) | 4
|
|
| Statement of Partners' Equity
|
| Nine months ended September 30, 2003(Unaudited) | 4
|
|
|
| Statements of Cash Flows
|
| Nine months ended September 30, 2003
|
| and 2002(Unaudited) | 5
|
|
|
| Notes to Financial Statements
|
| September 30, 2003(Unaudited) | 6
|
|
|
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS
|
| OF FINANCIAL CONDITION AND RESULTS
|
| OF OPERATIONS | 7
|
| ITEM 3. | QUANTITATIVE AND QUALITATIVE
|
| DISCLOSURES ABOUT MARKET RISK | 10
|
| ITEM 4. | CONTROLS AND PROCEDURES | 10
|
PART II OTHER
INFORMATION
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K
| | |
10
|
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
September 30, 2003(Unaudited)
1. Basis of Presentation:
The accompanying unaudited 2003 financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. Operating results for the nine months ended September 30,
2003 are not necessarily indicative of the results that may be expected for the year ending December 31,
2003, or for any other interim period. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Partnership's Form 10-K for the year ended December 31,
2002.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured home communities. On
August 20, 1998, the Partnership refinanced seven of its nine properties with GMAC Commercial Mortgage
Corporation (the "Refinancing").
Liquidity
As a result of the Refinancing, seven of the Partnership's nine properties are mortgaged. At the time of
the Refinancing, the aggregate principal amount due under the seven mortgage notes was $30,000,000 and
the aggregate fair market value of the Partnership's mortgaged properties was $66,000,000. The
Partnership expects to meet its short-term liquidity needs generally through its working capital provided
by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon acquisition, the Partnership
anticipated owning the properties for seven to ten years. All of the properties have been owned by the
Partnership for more than ten years. The General Partner may elect to have the Partnership own the
properties for as long as, in the opinion of the General Partner, it is in the best interest of the
Partnership to do so.
Net Cash from Operations totaled $902,644 and $874,768 for the quarters ended September 30, 2003 and
2002, respectively. Net Cash from Operations is defined as net income computed in accordance with
generally accepted accounting principals ("GAAP"), plus real estate related depreciation and
amortization. Net Cash from Operations does not represent cash generated from operating activities in
accordance with GAAP and is not necessarily indicative of cash available to fund cash needs. Net Cash
from Operations should not be considered as an alternative to net income as the primary indicator of the
Partnership's operating performance nor as an alternative to cash flow as a measure of liquidity. From
Net Cash from Operations the General Partner has decided to distribute $759,779, or $.23 per unit, to the
unit holders during the quarter ending September 30, 2003. The General Partner will continue to monitor
cash flow generated by the Partnership's nine properties during the coming quarters. If cash flow
generated is greater or lesser than the amount needed to maintain the current distribution level, the
General Partner may elect to reduce or increase the level of future distributions paid to Unit Holders.
While the Partnership is not required to maintain a working capital reserve, the Partnership has not
distributed all the Distributable Cash from Operations in order to build reserves. As of September 30,
2003, the Partnership's cash reserves amounted to $3,025,734.
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine properties reported combined
occupancy of 78% at the end of September 2003, versus 82% for September 2002. The average monthly
homesite rent as of September 30, 2003 was approximately $397, versus $382, an increase of 4% from
September 2002.
|
| Total Capacity | Occupied Sites
| Occupancy Rate | Average Rent*
|
| Ardmor Village | 339 | 306 | 90% |
388
|
| Camelot Manor | 335 | 255 | 76% |
374
|
| Country Roads | 311 | 230 | 74% |
271
|
| Dutch Hills | 278 | 250 | 90%
| 372
|
| El Adobe | 367 | 269 | 73%
| 450
|
| Paradise Village | 614 | 361 | 59%
| 335
|
| Stonegate Manor | 308 | 236 | 77% |
372
|
| Sunshine Village | 356 | 334 | 94%
| 493
|
| West Valley | 421 | 339 | 81% | 512
|
|
| Total on
9/30/03: | 3,329 | 2,580 | 78% |
$397
|
| Total on
9/30/02: | 3,329 | 2,735 | 82% |
$382
|
*Not a weighted average
| Gross Revenues | | Net Income
|
| 9/30/03 | 9/30/02 |
9/30/03 | 9/30/02
|
| Ardmor Village
| $ 489,779
| $ 424,075
| $ 206,728
| $ 184,097
|
| Camelot Manor
| 329,917 | 308,861 | 112,297 | 122,594
|
| Country Roads
| 214,006 | 203,426 | 85,130 | 90,515
|
| Dutch Hills
| 318,059 | 352,476 | 148,999 | 129,161
|
| El Adobe
| 401,153 | 387,119 | 193,537 | 182,444
|
| Paradise Village
| 439,015 | 439,567 | 81,409 | 63,642
|
| Stonegate Manor
| 300,631 | 305,257 | 103,608 | 120,744
|
| Sunshine Village
| 605,727 | 548,944 | 272,019 | 277,063
|
| West Valley
| 573,533 | 524,898 | 327,846 | 325,209
|
|
| 3,671,820 | 3,494,623 | 1,531,573 | 1,495,469
|
| Partnership Management:
| 3,034 | 7,672 | (70,652) | (43,045)
|
| Other Non Recurring expenses:
| ----- | ---- | (102,728) | (114,888)
|
| Debt Service
|
|
| (455,549) | (462,768)
|
| Depreciation and Amortization
| ----- | ----
| (445,964) | (443,134)
|
|
| $3,674,854 | $3,502,295 | $456,680 | $431,634
|
Comparison of Nine Months and Quarter Ended September 30, 2003 to Nine Months and Quarter Ended September
30, 2002
Gross revenues for the first nine months of 2003 increased to $10,681,641 as compared to $10,228,965 for
the same nine months of 2002. Gross revenues for the quarter ended September 30, 2003 increased to
$3,674,854, as compared to $3,502,295 the same three months of 2002. The increase was the result of the
increase in home sales income.
As described in the Statements of Income, Total Operating Expenses for the first nine months of 2003 were
$9,070,880 a 5% increase from $8,639,444 for the same nine months of 2002. Total Operating Expenses for
the three months ended September 30, 2003 increased $147,513, to $3,218,174 compared to $3,070,661 in
2002.
As a result of the aforementioned factors, Net Income for the nine month period increased to $1,610,761,
compared to $1,589,521 in 2002. Net Income for the three months ended September 30, 2003 increased to
$456,680 compared to $431,634 for the same three months of 2002, a 5.8% increase.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Partnership is exposed to interest rate rise primarily through its borrowing activities.
There is inherent roll over risk for borrowings as they mature and are renewed at
current market rates. The extent of this risk is not quantifiable or predictable because of the
variability of future interest rates and the Partnership's future financing requirements.
Note Payable:
At September 30, 2003 the Partnership had a note payable outstanding in the amount of $27,936,663.
Interest on this note is at a fixed annual rate of 6.37% through March 2009.
The Partnership does not enter into financial instruments transactions for trading or other speculative
purposes or to manage its interest rate exposure
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The General Partner and Principal Financial Officer have reviewed and evaluated the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a
date within 90 days before the filing date of this quarterly report. Based on that evaluation, The
General Partner and Principal Financial Officer the have concluded that our current disclosure controls
and procedures are effective and timely, providing them with material information relating to us required
to be disclosed in the reports we file or submit under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in our internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation. We are not aware of any
significant deficiencies or material weaknesses, therefore no corrective actions were taken.
PART II - OTHER INFORMATION
ITEM 5. Reports of Form 8-K
(A) Reports of Form 8-K
There were no reports filed on Form 8-K during
the three months ended September 30, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned. We the undersigned certify to the best of our
knowledge neither the report nor the financial statements therein, contain any untrue statements of
material fact. The financial information included in the report fairly represents the financial
condition and result of operations for the periods presented herein.
Uniprop Manufactured Housing
Communities Income Fund II,
A Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
BY: /s/ Paul M. Zlotoff
Paul M. Zlotoff, General Partner
BY: /s/ Gloria A. Koster
Gloria A. Koster, Principal Financial Officer
Dated: November 12, 2003
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Uniprop Manufactured Housing Income Fund II (the
"Partnership") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Paul M Zlotoff, General Partner of the
Partnership, Gloria A. Koster, Principal Financial Officer certify, pursuant to U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company as of September 30, 2003.
Genesis Associates Limited Partnership,
General Partner
/s/ Paul M. Zlotoff
__________________________
By: Paul M. Zlotoff, its' General Partner
/s/ Gloria A. Koster
__________________________
By: Gloria A. Koster, its Principal Financial Officer
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Paul M Zlotoff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing Income Fund II;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003 Signature: /s/ Paul M. Zlotoff
Paul M. Zlotoff, Principal Executive Officer
President & Director of Genesis Associates
It's General Partner
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gloria A. Koster, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Uniprop Manufactured Housing
Income Fund II;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by
the quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this
quarterly report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a. designed such disclosure controls and procedures to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date
within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the of the
disclosure controls and procedures based on our evaluation as the Evaluation Date.
5. The registrant's other certifying officers and I have disclosed, based on our most recent
evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal controls which could
adversely affect the registrant's ability to record, process, summarize and report financial data and
have identified for the registrant's auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this quarterly report whether
or not there were significant changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 12, 2003 Signature: /s/ Gloria A. Koster
Gloria A. Koster, Chief Financial Officer